HC Deb 18 June 1935 vol 303 cc321-33

11.16 p.m.


I beg to move, in page 14, line 1, to leave out from the beginning, to the second "to," in line 7, and to insert: If a judge of the High Court is satisfied by information on oath by an officer of customs and excise that there is reasonable ground for suspecting that an offence under any Act relating to the customs has been committed in respect of any goods whereof an entry has been delivered for the purposes of any of such Acts he may on application made by an officer of customs and excise at any time within three years after the delivery by order require the importer of the goods and his agents. The purpose of this Amendment is to ensure that certain investigations shall only be made if there is reason to believe that there is something to be found out. This Clause really raises the same point as created so much public agitation, and so much alarm in all quarters of this House, on the Incitement to Disaffection Act. In that Act the House qualified the right of public authorities to make a search. In this Clause the same powers of search mutatis mutandis are claimed by the Customs authorities, but without the qualifications which have now become statutory in the other case. Hon. Members may at first sight be a little surprised to hear how far reaching this Clause is, but I do not think they will be so surprised if they read it, and still less surprised when they know the history of it. For what purpose do the Commissioners seek this power, which is a new power? It is true that they have certain rights of a limited character under the Revenue Act, 1909, but those powers were given for a very limited and specific purpose, as the result of a report of a Departmental Committee—merely for the purpose of collecting statistics of imports and exports for the trade figures. For what purposes do the Commissioners want these entirely new powers? By Clause 10 they preserve the right to make regulations for the purpose of giving effect to Clause 15 of the Act of 1932, as to valuation, and once a valuation has been made there is nothing in the Import Duties Act or in any other Customs Act which empowers the Commissioners to reopen the valuation or to vary the charge of duty as distinct from taking criminal proceedings or proceedings for penalties if they consider themselves to have been misled by incorrect information. Once they have made their valuation, they are functus officio, as far as requiring further information is concerned, under the law as it stands.

On the Second Reading Debate, the Financial Secretary to the Treasury said that these Clauses were included, because there was a legal doubt as to the rights of the Commissioners, under Section 15 of the Act of 1932. It is within my knowledge that that doubt has been created, because, under advice, I created it myself. It has now been accepted that the Commissioners have had no right hitherto to make many of the investigations which they have made. I do not know whether hon. Members know what happens in the conduct of the Customs authorities. It might interest them, and to a certain extent shock them. It is all done with charm and courtesy. The officials appear, at any hour of the morning or afternoon at the premises of a firm, and say: "We have called to look at your books," without any reference to the particular books, or to the goods in respect of which the inquiry is being made. It is just a roving commission into the books, records, letters, balance-sheets and other documents of the firm. The Customs authorities are now alive to the fact that, under the law, that was completely unauthorised, once they had made the valuation, and that nobody was under an obligation then to expose his books or documents, or to give information to the Customs authorities. The only purpos for which this Clause has been inserted is to enable the Customs authorities to find out whether a crime has been committed. They claim the right to go into the premises of anybody connected with the importation of goods, however distant his connection may be, and persons have to furnish, in such form as the officer may require, any information relating to the goods, and to produce any books or documents, of whatever nature, relating to them. That is much too wide a power, in such an unqualified form, to be put into the hands of any public official, however honourable and able he may be, for the purpose of finding out whether a criminal prosecution can be taken. It is also contrary to the spirit of the law in this country that any man should be made to incriminate himself.

When the officer goes into a large firm, the first thing that happens is that the employés say: "There is something wrong here, because somebody has been sent here to make an inquiry into their affairs." That creates a great deal of disturbance, and does not tend to the peaceful and harmonious carrying on of business. It does not happen with the Income Tax authorities. They cannot go into premises, or ask for documents, and, although balance sheets are often provided for them, they have no right to them. Consequently, they get voluntarily information which they cannot call for under compulsion. The Customs authorities, however, not only inspect documents, but take them away—borrow them—and they photograph them and keep permanent records of the private documents and affairs of, it may be, and most often is, perfectly innocent subjects against whom no charge has been or can be or ever is made. They ask questions, and, although the subject is not cautioned, he is liable to have anything he says brought up in evidence against him. All this is done because the business men to whose offices and warehouses the Customs authorities send representatives do not know that the Customs authorities have no legal sanction for the attitude they are adopting.

It is also very important that one man's business should not be known to another man, but there is great alarm and fear that very often that is not the case. I myself know of a case in which a Customs official went to a man's office, made an inspection, and then said, "I am not satisfied with this; I am going to X.Y.'s office to make further inquiries." He went to X.Y., and said, "I have been to A.B. and found out certain things, and I want now to verify them or find that they are not accurate." That is an intolerable position. The subject as a rule thinks that there is a lawful sanction for it, and that he is under a legal obligation to give information, but there is no such obligation, and it is because the Customs authorities are aware of that that Clause 15 has been inserted, which would make statutory that which, according to the common law of this country, ought never to be made statutory.

The sole object of the Clause, as the law stands at present, is to find out whether or not the person of whom the inquiry is made—who is asked to furnish information and give disclosure of his books—has been guilty of an offence punishable by either fine or imprisonment or both. It is for that reason that I have put down an Amendment which would put the Customs authorities in exactly the same position in relation to this Bill as the police are in in connection with the Incitement to Disaffection Act. I am not suggesting that, where there is reason to suspect that a crime has been committed, the Customs authorities should be excluded from the possibility of discovering evidence of it. If a crime has been committed, let the crime be punished. That will be the view of every hon. Member of the House. But do not give what is in effect a general right of search without a warrant. Therefore, I suggest in my Amendment that the powers which the Customs authorities seek under Clause 15 of the Bill, as far as inspection of documents is concerned shall be conferred upon them, but with this qualification, that, just as in the case of the Incitement to Disaffection Act, they shall first satisfy a judge of the High Court that there is reasonable ground for suspecting that an offence has been committed. If they once establish that primâ facie position, by all means let them have available to them books and documents, but do not even then let them be entitled to go and ask questions of the taxpayer which can afterwards be used in evidence against him. It is very necessary, as day by day experience with the growing obligation of our Customs system shows, that the rights of the subject, and also of the Crown, should be carefully defined and protected. It is wrong—and it is against that wrong that this Amendment is directed—that the powers of the Crown should be unlimited and be exercised against the subject, who has no remedy and no recourse.

11.31 p.m.


The hon. and gallant Member has made very heavy weather of what is a perfectly straightforward affair in dealing with very straightforward people. The present law is that the Commissioners may make regulations in particular for requiring any person concerned with the importation of goods into the United Kingdom to furnish the Commissioners with such information as is necessary for a proper valuation of the goods, and to produce any books of account or other documents of whatever nature relating to goods imported by that person. It goes on to say that if any person contravenes or fails to comply with any regulation of the Section he is liable to a penalty of £50. It is obvious that there must be some sort of check upon the declaration of those entries to make certain that the Customs are not defrauded, and the practice on the part of the Customs has been to accept the declarations and invoices which are handed in at the time, to fix the duty on the value as determined at the time, and subsequently to make sure that the Customs are not being misled.

The reason for the alteration in the law is that the legality has been questioned of an alteration in the value when once the value has been fixed, and it infers that, as the law stands now, it would not be right or possible for a revaluation to be made if it were discovered that, in fact, the information given to the Customs at the time the declaration was first made was not correct. Therefore, this new Clause is proposed which gives that legality to the present practice of the Customs and allows them to make tests up to a period of three years. Anyone who has been honest in his dealings has nothing to fear from this Clause. The Customs will not be continually going and raking round to see whether there is any possibility of some error having been made, but, if they have reason to suppose that they have been given false informa- tion, then they ought to have the right to investigate the case, and I do not think that three years is any too long. The only other alternative would be to do what they have every right to do, and that is to make a test at the time, before they accept the goods, and fix the duty; but that would involve intolerable delay. It is very much to the interest of the traders that this system should be adopted, under which there is occasionally a test to make sure that everything is all right. To suggest that it should require the sanction of a Judge of the High Court for every test of this kind would obviously mean that the trader would be put to inconvenience and delay, which would congest all our docks and cause great inconvenience, annoyance and loss to trade. Therefore, I hope the Committee will pass the Clause.

11.36 p.m.


All these matters of convenience for administration always have a perfectly simple explanation. As the right hon. Gentleman says, anybody who is honest and straightforward has nothing to fear. In one's own house there is no reason why the police should not come in at any moment and if one is honest and straightforward one has nothing to fear, but it has always been held hitherto that there is a certain amount of privacy both in business premises and private premises which the ordinary subject is entitled to. Honest though he may be there is no reason why his premises should be invaded from time to time by people who want to make inquiries, when there is no particular reason except administrative convenience for making those invasions.

The right hon. Gentleman said that this Clause has something to do with revaluation. It does not authorise revaluation or deal with it: what it does is to extend the power which exists in the Clause which the right hon. Gentleman read. The power is extended over a period of three years after delivery of the goods, and under it any Customs officer is entitled, without consulting the Commissioners—it is not a case of the Commissioners ordering an inquiry and saying that they would send an officer to make the inquiry—for a period of three years to come, to go into the premises, not the premises of the importer only; not only the premises of the man who may have committed a crime, but the premises of the person or company with whom he has dealt; the premises of the railway company, the carriers of the goods; the stevedore company who helped to land the goods; the shipping company who shipped the goods. In fact, any person concerned with the importer for a period of three years is liable to an inquiry for information relating to goods, whether the information be in books or not, whether verbally or in writing. His office may be turned upside down for the sake of something which may be mere suspicion.


There is power to do it now.


He cannot do it for a period of three years after delivery. There is a very important difference. At the moment he suspects that something is happening, he can go and make an investigation, but once the goods are off the premises and the matter has been cleared up there is no further power. Under this Clause, however, for a period of three years after delivery he can go and turn up old records, with all the inconvenience, expense and waste of time that is attached to such inquiries, without any authority from any superior officer of any sort or kind. It is left entirely and absolutely at his discretion and, however convenient that may be administratively, I am surprised at the right hon. Gentleman encouraging these inquisitorial methods which I should have thought he would have been one of the last persons in the world to encourage. If a similar provision was made in the Income Tax field hon. Members would be up in arms against the suggestion that people could walk into their house and demand all sorts of facts and figures from their staff, their acquaintances and friends.


In the case of Income Tax, you can go back six years.


Yes, but they cannot walk into your premises and make inquiries. They can assess you, and you can appeal. If you do not produce your reports you may suffer, but they cannot go into your premises and demand information. It is a very different thing using the pressure of an assessment to make a person disclose documents and going on to his premises and taking what you want.


Would the hon. and learned Member prefer the other method?


I think it would be far better. You can assess them at a higher figure if the Customs people think there is something wrong. The Commissioners are attempting to arrive at the open market value, and, if they say that £50 is a ridiculous sum, they can put it at £100, and then the people who are responsible for the importation will have to produce figures and documents to show that they are wrong. That is more preferable than giving a roving right of entry over a period of three years, not only to the premises of the importer but to the premises of everybody else who has dealt with the goods. There is no precedent for this in law. When searches of this sort are carried out a search warrant must be obtained and in criminal matters the search is carried out by the police who are trained. In this case, you are authorising a general right of search by persons who are not trained and without any power of control in the hands of the Chief Commissioner, or the Minister or a judge. The right hon. Gentleman is creating an extremely dangerous precedent.

11.44 p.m.


The hon. and learned Member has made out a strong case against the Clause. The Amendment may be too drastic and go too far, but to give this power to hundreds of Customs officers, who are, of course, most efficient, but who still are comparatively minor officials, is going far beyond the necessities of the case. I suggest that the right hon. Gentleman should devise some machinery which would protect the ordinary business man from the rather nosey Parker Customs officer, who occasionally does exist. There are many ports concerned; not only London, but Liverpool and Hull and Glasgow. The quality of the officials must vary; their ability cannot be of one common standard. If this machinery is to work justly to all concerned some more protection of the trader should be devised.

11.46 p.m.


My hon. Friend has rendered a distinct service in bringing this matter to the notice of the Committee. There are two or three features about this Clause which, I feel confident, many Members do not appreciate. In the first place the Clause does not state the purpose for which this action may be taken. It is all very well for the Chancellor of the Exchequer to say that this action would be taken when the officials had reason to believe that a false statement had been made. The Clause does not say that; it does not indicate in any way the purpose for which this entry and this demand can be made. It seems intolerable that we should pass such a Clause. Surely it is incumbent on the Government to state in the Clause the purpose for which this action is required to be taken, and also to state some grounds for the action. At present the entry and demand may be entirely at large and may be made on any person who is concerned with or engaged in the importation of the goods. "Any person" may be a perfectly innocent person. This power may be used against a perfectly innocent person against whom there is no suggestion that he had conspired, or in any way is concerned with, a suspected crime.

The action can be taken at any time of day or night, and no man or woman who has had anything to do with the importation of goods will be safe. It will be competent for a Customs officer to go to a house or office at midnight, or at any hour of the day or night, and make this demand. Apparently this power is not in derogation of any powers under any other Act. Yet the powers that already exist seem to be very comprehensive. Are they not sufficient for the right hon. Gentleman? The powers given here are an addition to those which already exist in the legislation of the country. The Chancellor has not made out his case. He told us that the purpose was to effect revaluation. Where in this Bill is there power to revalue, supposing that the information required justifies such a revaluation? Clearly, unless that power exists under this Bill or under some other Act it falls to the ground. It is intolerable that these powers should be granted without a word being said about them previously. Had it not been for the fact that attention was directed to this by my hon. and learned Friend the whole thing might have passed without protest.

11.51 p.m.


I think that many other Members who have heard this discussion will, like myself, wonder whether the Government's explanation is one that can be accepted. The argument has been used that the honest man has nothing to fear if the policeman visits his house; but I think an honest man would be thoroughly justified in protesting that his house is not a place which may be entered at any time unless there is some reasonable suspicion that something is wrong there. That ought to appeal to every Member. I have no doubt that there are many Members like myself who had not gone into this matter very fully before, but who since hearing this discussion are much concerned at the wording of this Clause. When I heard the Chancellor of the Exchequer talk about the honest man having nothing to fear it struck me as a very fine phrase, but I do not think that we should do this in this way. The Amendment suggests that if certain information is laid which would justify a search—


Can the hon. Member point out where there is under this Section any right of search at all?


No, I cannot. I am only going on the discussion and the Chancellor of the Exchequer, as I understood his reply, did not deny that the right of search existed. It was because of that that I was led to intervene. The Chancellor admitted that it was quite open to go into anybody's premises. If the Chancellor will assure me that that is not so and that there is some protection against any high-handed method of entering anybody's premises to search for documents I shall be relieved. If we cannot have such an assurance, I think it is questionable whether we should allow this Clause to pass.

11.54 p.m.


I wonder whether the Chancellor of the Exchequer could explain a point which to some of us is obscure? He said that these powers are being taken because it had been found by experience that it was not possible to re-value goods after a certain time. This Clause, he said, was put down for no other reason than to give the Customs authorities the right to re-value. But as I read the Clause there is no mention of re-valuation. If my reading of the Clause is right, then the justification which the Chancellor advances is not the right justification, and we are entitled to know for what reason the Clause really has been put in.

11.55 p.m.


I am sorry if I used a word which was perhaps not entirely appropriate. If the Customs wish to prove that an importer has committed fraud, they have to show that the value which he has declared on goods is not the true value. In that sense, they have to prove a "revaluation"—in other words, that the value placed on the goods by

the importer is the wrong value and some other value is the right value. That is all I meant by "revaluation." If they succeed in proving that a person has been guilty of making a false declaration then there can be a prosecution and the person concerned will become liable to the provisions of Clause 14.

Question put, "That the words proposed to be left out stand part of the Clause."

The Committee divided: Ayes, 163; Noes, 28.

Division No. 237.] AYES. [11.55 p.m.
Acland-Troyte, Lieut.-Colonel Fraser, Captain Sir Ian Peake, Osbert
Agnew, Lieut.-Com. P. G. Fremantle, Sir Francis Peat, Charles U.
Albery, Irving James Fuller, Captain A. G. Peters, Dr. Sidney John
Apsley, Lord Gledhill, Gilbert Pickthorn, K. W. M.
Aske, Sir Robert William Gluckstein, Louis Halle Pike, Cecil F.
Assheton, Ralph Graves, Marjorie Procter, Major Henry Adam
Balley, Eric Alfred George Gretton, Colonel Rt. Hon. John Ramsay, Capt. A. H. M. (Midlothian)
Baldwin-Webb, Colonel J. Grimston, R. V. Ramsay, T. B. W. (Western Isles)
Beaumont, Hon. R. E. B. (Portsm'th, C.) Gunston, Captain D. W. Ramsden, Sir Eugene
Beit, Sir Alfred L. Guy, J. C. Morrison Rea, Sir Walter
Blindell, James Hannon, Patrick Joseph Henry Reed, Arthur C. (Exeter)
Boulton, W. W. Harbord, Arthur Reid, William Allan (Derby)
Bowyer, Capt. Sir George E. W. Harvey, Major Sir Samuel (Totnes) Roberts, Alec (Wrexham)
Boyce, H. Lesile Haslam, Sir John (Bolton) Ross Taylor, Walter (Woodbridge)
Braithwaite, Maj. A. N. (Yorks, E. R.) Hellgers, Captain F. F. A. Ruggles-Brise, Colonel Sir Edward
Braithwaite, J. G. (Hillsborough) Herbert, Capt. S. (Abbey Division) Russell, Albert (Kirkcaldy)
Broadbent, Colonel John Holdsworth, Herbert Rutherford, John (Edmonton)
Brocklebank, C. E. R. Hope, Capt. Hon. A. O. J. (Aston) Rutherford, Sir John Hugo (Liverp'l)
Brown, Col. D. C. (N'th'l'd., Hexham) Hornby, Frank Salt, Edward W.
Brown, Rt. Hon. Ernest (Leith) Horsbrugh, Florence Samuel, M. R. A. (W'ds'wth, Putney).
Brown, Brig.-Gen. H. C. (Berks., Newb'y) Howard, Tom Forrest Shakespeare, Geoffrey H.
Browne, Captain A. C. Hudson, Robert Spear (Southport) Shaw, Helen B. (Lanark, Bothwell)
Burghley, Lord James, Wing-Com. A. W. H. Simon, Rt. Hon. Sir John
Burnett, John George Jamleson, Rt. Hon. Douglas Smiles, Lieut.-Col. Sir Walter D.
Campbell, Vice-Admiral G. (Burnley) Joel, Dudley J. Barnato Smith, Bracewell (Dulwich)
Carver, Major William H. Jones, Lewis (Swansea, West) Smith, Louis W. (Sheffield, Hallam)
Castlereagh, Viscount Kerr, Hamilton W. Southby, Commander Archibald R. J.
Chamberlain, Rt. Hon. N. (Edgbaston) Lamb, Sir Joseph Qulnton Spencer, Captain Richard A.
Cochrane, Commander Hon. A. D. Law, Richard K. (Hull, S. W.) Stevenson, James
Colman, N. C. D. Lelghton, Major B. E. P. Stones, James
Colville, Lieut.-Colonel J. Lennox-Boyd, A. T. Stourton, Hon. John J.
Conant, R. J. E. Liddall, Walter S. Strickland, Captain W. F.
Cooper, A. Duff Llewellin, Major John J. Stuart, Hon. J. (Moray and Nairn)
Courtauld, Major John Sewell Lloyd, Geoffrey Stuart, Lord C. Crichton-
Courthope, Colonel Sir George L. Lockwood, John C. (Hackney, C.) Sugden, Sir Wilfrid Hart
Cranborne, Viscount Loder, Captain J. de Vere Thomas, James P. L. (Hereford)
Craven-Ellis, William Loftus, Pierce C. Thomson, Sir James D. W.
Critchley, Brig.-General A. C. Mabane, William Thorp, Linton Theodore
Crookshank, Col. C. de Windt (Bootle) MacAndrew, Lieut.-Col. Sir Charles Todd, A. L. S. (Kingswinford)
Crookshank, Capt. H. C. (Gainsb'ro) McConnell, Sir Joseph Tufnell, Lieut.-Commander R. L.
Cross, R. H. McCorquodale, M. S. Wallace, Captain D. E. (Hornsey)
Cruddas, Lieut-Colonel Bernard McKie, John Hamilton Ward, Irene Mary Bewick (Wallsend)
Culverwell, Cyril Tom Mallalieu, Edward Lancelot Ward, Sarah Adelaide (Cannock)
Davies, Edward C. (Montgomery) Manningham-Buller, Lt.-Col. Sir M. Warrender, Sir Victor A. G.
Davies, Maj. Geo. F. (Somerset, Yeovil) Margesson, Capt. Rt. Hon. H. D. R. Wedderburn, Henry James Scrymgeour-
Danville, Alfred Martin, Thomas B. Wells, Sydney Richard
Drewe, Cedric Mayhew, Lieut.-Colonel John Williams, Charles (Devon, Torquay)
Duncan, James A. L. (Kensington, N.) Mellor, Sir J. S. P. Wills, Wilfrid D.
Eastwood, John Francis Mills, Major J. D. (New Forest) Wise, Alfred R.
Ellis, Sir R. Geoffrey Morris, John Patrick (Salford, N.) Womersley, Sir Walter
Emmott, Charles E. G. C. Morris-Jones, Dr. J. H. (Denbigh) Wragg, Herbert
Emrys-Evans, P. V. Morrison, William Shepherd
Entwistle, Cyril Fullard Moss, Captain H. J. TELLERS FOR THE AYES.
Evans, David Owen (Cardigan) Muirhead, Lieut.-Colonel A. J. Sir George Penny and Lieut.-Colonel
Fleming, Edward Lascelles Nail, Sir Joseph Sir A. Lambert Ward.
Ford, Sir Patrick J. O'Donovan, Dr. William James
Adams, D. M. (Poplar, South) Davies, David L. (Pontypridd) Grundy, Thomas W.
Banfield, John William. Dobble, William Hall, George H. (Merthyr Tydvll)
Cleary, J. J. Edwards, Sir Charles Jenkins, Sir William
Cripps, Sir Stafford Greenwood, Rt. Hon. Arthur Leonard, William
Daggar, George Grenfell, David Rees (Glamorgan) Logan, David Gilbert
Lunn, William Smith, Sir J. Walker (Barrow-in-F.) Williams, Edward John (Ogmore)
McEntee, Valentine L. Smith, Tom (Normanton) Williams, Thomas (York, Don Valley)
Milner, Major James Strauss, G. R. (Lambeth, North) Wilmot, John
Nathan, Major H. L. Tinker, John Joseph
Paling, Wilfred White, Henry Graham TELLERS FOR THE NOES.
Mr. John and Mr. Duncan Graham.

Resolution agreed to.

Clause ordered to stand part of the Bill.

Ordered, "That the Chairman do report Progress, and ask leave to sit again."—[Captain Margesson.]

Committee report Progress; to sit again To-morrow.